Paddy Power Trader, the spread betting unit of betting group Paddy Power Plc, says bettors have been delving into gold trades, as the precious metal rose in price this week. The rise in gold has been attributed to a fall in the dollar and volatile equity markets. The crisis in banking has also revived some investment demand for the precious metal. Paddy power says it has also seen equity trading increase despite new short-selling trading restrictions, that were introduced last week.

While the dollar has again weakened against the euro, to trade at 1EUR to 1.48 USD, some speculators have been delving into gold as a safe haven for investment. The financial spread betting firm, paddypowertrader.com, says that it has watched spread bettors move into commodities in growing numbers over the past few days:

Gold trades on paddypowertrader.com are up 266% in the last month alone. Ongoing uncertainties in the equities markets, particularly in the banking sector, look to have triggered the gold rush, the financial spread betting firm said today.

“It seems that our clients are favouring gold and oil over equities because of conflicting reports and volatility in those markets. Gold hit the roof with an all-time high of $1,030.80 an ounce in March, but has lost ground since. However it seems our clients think the only way is up for the precious metal as, 83% of them are going long on gold.” said Davin Mc Ananey, Commercial Manager of paddypowertrader.com.

Gold has also been supported by the movement in Brent crude oil futures which now sit at $104.01 per barrel. The result was that Gold bullion for December delivery reached $894.30 solidifying profits for clients long on gold. Gold price has increased by 13% in the past week.

Short-Selling

Paddy Power Trader says it has been following the movement of its client base closely since the decision of both the Financial Services Authority and the Irish Financial Regulator to prohibit short selling of stocks on publicly quoted financial stocks from last week.

“It is unlikely that the ban on short selling banks will greatly influence our business, equity trading only forms a small percentage of our business and most of those trades are long” said Peter O'Donovan, Head of Financial Spread Betting, paddypowertrader.com told Finfacts.

“However, I don't see how this action by the regulators will solve the deeper problems of over-leveraging in the banking sector. The problem in the markets is nothing to do with short-selling; it is to do with liquidity between banks. Quite how this action by the financial regulators is supposed to improve matters is not clear,” continued O'Donovan.

“Some traders continue to short the ISEQ ETF (a basket of the top 20 shares traded on the ISEQ which include the four Irish banks) in an effort to gain some short exposure to Irish banks,” O'Donovan said.

paddypowertrader.comlaunched in the summer of 2007 enabling clients to take advantage of the many benefits of financial spread betting, including being a tax–free alternative to trading shares and financial markets. The product continues to grow in popularity in the UK and Ireland, amongst not only financial industry professionals, but also amongst those with an interest in the stock market.

Paddy Power Trader, is a joint venture between Paddy Power, Ireland's largest bookmaker, and London Capital Group (LCG). LCG is regulated and authorised by the Financial Services Authority (FSA). As a result paddypowertrader has suspended the short selling of 29 UK registered financial stocks from midnight on Thursday the 19th of September 2008. It also complies with rules introduced by the Irish Financial Regulator on the same date prohibiting the short selling of stocks on Irish publicly quoted banks.

* Prices quoted as of 12noon on 23.09.2008

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